N.Y. charges in US-Russia military electronics case

NEW YORK – A Kazakhstan-born businessman was charged in New York on Wednesday with being a secret Russian agent involved in a multimillion-dollar scheme to illegally export microelectronics from the United States to Russian military and intelligence agencies.

Alexander Fishenko was among 11 defendants named in an indictment unsealed in federal court in Brooklyn.

Eight of the defendants, including the 46-year-old Fishenko, were arrested Tuesday night and Wednesday morning and were to be arraigned in Houston; the names of their attorneys were not immediately available. Three others were still being sought.

The indictment alleges that since October 2008, Fishenko and his co-defendants "engaged in a surreptitious and systematic conspiracy" to obtain the high-tech electronics from U.S. makers and suppliers while purposely evading licensing requirements.

The microelectronics are subject to strict government controls. Authorities say they could have a wide range of military uses, including radar and surveillance systems, weapons guidance systems and detonation triggers.

U.S. authorities say the charges come amid a modernization campaign by the Russian military. Officials there are seeking components that are unavailable in Russia and often can only be bought in the United States.

Fishenko, a naturalized U.S. citizen and owner of Houston-based Arc Electronics Inc., was charged with operating inside the U.S. as an unregistered agent of the Russian government.

According to court papers, Fishenko was born in the former Soviet Republic of Kazakhstan and is a graduate of a technical institute in St. Petersburg before coming to America in 1994. He holds U.S. and Russian passports and frequently travels overseas.

An analysis of Arc's accounting records showed a "striking similarity between fluctuations in Arc's gross revenues and the Russian Federation's defense spending over the last several years," the court papers say. Investigators also recovered a letter to Arc from a Russian domestic intelligence agency lab complaining that microchips supplied by the company were defective, the papers add.

Phone calls and emails intercepted by U.S. investigators also "constitute devastating evidence of Fishenko's illegal procurement for the Russian government," the court papers say.

Prosecutors said the evidence revealed repeated attempts by Fishenko to cover his tracks. In one instance in March, he "directed an employee of a Russian procurement firm to 'make sure that our guys don't discuss extra information, such as this is for our military client,'" the papers say.

In an earlier conversation, Fishenko favorably referred to a business associate using "a Russian colloquialism for 'spy' or 'secret agent,'" the papers add.

FBI agents in Houston executed a search warrant on Wednesday at Fishenko's firm. A phone call to the company would not go through.